Bureaucratic reforms at design level a must for lasting economy: Lutfey Siddiqi

Reforming Bangladesh's bureaucratic and economic system must start from the very design level, said Lutfey Siddiqi, special envoy on international affairs to the chief adviser, emphasising that fundamental flaws in administrative design continue to hold back progress despite recent achievements.

Speaking at a roundtable discussion on "Business Climate: Reforms, Opportunities, and Challenges Ahead" organised by The Financial Express at a hotel in Gulshan, Siddiqi called for a complete redesign of bureaucracy and governance structure, noting that piecemeal reforms would not be enough to ensure long-term efficiency and growth.

"We have a fundamental design flaw," he said. "Our bureaucracy has no clear accountability for businesses. In countries like Singapore and Malaysia, there are inter-ministerial coordinators to streamline these processes. We need similar structural redesigns."

He further said the interim government made several reform commissions and committees. "But we have yet to get economic reform which was much expected."

Siddiqi also mentioned that bureaucratic procedures have been streamlined. "Previously, every issue required approval from five different offices. Now, most can be resolved in a single sitting," he said. 

He added that businessmen should be cautious about the design level reform so that the next elected government does it cordially. 

He said the country has technology, supported rules to digitalise the port system. But it has not worked mainly because some departments of the ministries and middleman are reluctant to do digitisation.

Pvt investment to remain stagnant until polls

Private investment will remain subdued until a new government is elected, business leaders warned at the event, citing policy uncertainty and weak confidence.

"Private investment has clearly slowed, which is evident from Bangladesh Bank data," said Taskeen Ahmed, president of the Dhaka Chamber of Commerce and Industry. "We need political stability and an elected government to restore policy certainty."

Moynul Islam, president of the Bangladesh Ceramic Manufacturers and Exporters Association, said consumption has stalled. "I asked my staff what's hurting sales. They said people are not spending until the election. Construction is stagnant, and we are suffering alongside cement and rod makers."

Shams Mahmud, president of the Bangladesh-Thai Chamber of Commerce and Industry, said reforms introduced by the interim government are not yet visible. "It's time to pause further changes and hold the election so an elected government can pursue reforms with legitimacy."

Local investment more crucial than FDI

Showkat Aziz Russell, president of the Bangladesh Textile Mills Association, questioned the government's push for foreign investment.

"When a country struggles to extinguish a fire at its international airport, lacks policy consistency, and faces an energy crisis – who will invest?" he said. "We should prioritise local investors. They create jobs and revenue."

He noted that domestic private investment contributes most to GDP, while FDI remains below one percent. "We shouldn't appear desperate for foreign investment," he added.

Tax policy questioned

Mohammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association, criticised the turnover tax.

"It was first introduced as adjustable but later made non-adjustable – effectively treating it as income tax whether a business makes profit or loss," he said. "Even the NBR chairman admitted it is business-unfriendly but said he cannot amend it."

Abul Kasem Khan, chairperson of BUILD, highlighted the absence of accountability in government offices.

"Businesses are accountable to the government, NBR, and people. But bureaucrats, paid through taxpayers, are accountable to no one. That must change," he said. "The bureaucratic system is strangling potential. We must free the private sector."

Energy pricing, raw materials, defaulters 

Khourshed Alam, COO of AkijBashir Group, said current gas pricing discourages new factories. "New industries pay higher rates while older ones enjoy cheaper gas. This deters investment," he said.

He also noted that Bangladesh has banned sand extraction, forcing glass producers to import sand from Egypt and Indonesia. "We should explore responsible local extraction," he added.
Sharif Zahir, chairman of United Commercial Bank, urged tough action against loan defaulters who moved money abroad. 

"Their shares should be frozen, and they must be barred from owning banks again. Political parties should declare them unwanted," he said.